Trakx Weekly Update: December 2

Key Crypto Market Figures

CTIs Weekly Performance

Following a solid couple of weeks some of the steam came out of the Bitcoin rally but digital asset prices as a whole are still experiencing robust gains as evidenced by the 6% increase in our benchmark Top10 Crypto CTI over the last seven days. The star performer though last week was our AI CTI, gaining 38.5%, with the DePin and Recovery CTIs in second and third place after posting weekly gains of 23%. By contrast, bottom place in the performance table was taken by the Bitcoin Momentum CTI. It slipped 3.1% as investors were quick to book profits from its stellar post-election rally after the market cap leader failed to break above $100,000 on its first attempt.

AI In Vogue

As indicated by the strong weekly gain in our thematic CTI, AI tokens were firmly in the spotlight last week. Attention was centred on Virtuals Protocol, a launchpad and market place for AI agents that allows all users – regardless of technical ability – to create and monetize agents for virtual interactions. By connecting AI software with blockchain the agents running on Virtuals Protocol are able to interact and make decisions autonomously, including making on chain transactions. The 170% rally in the project’s native token VIRTUAL last week is testament to the growing demand for access to AI, a sector that has a natural tendency to centralization because of the extremely high costs of training LLMs (typically running into the hundreds of millions of dollars), to be widened and democratized.

While many people may be worried about AI agents making humans redundant, for now at least humans still have the upper hand. We know this because last week a human managed to convince an AI agent known as Freysa to hand over $47,000 worth of ETH on the Base blockchain. The funds were accumulated as part of a game where users paid to interact with the agent in the hope of convincing it to call an approveTransfer function and release the funds to them. It may have taken 482 attempts but in the end humanity prevailed and a user who goes by the title p0pular.eth claimed the prize.

Tornado Cash

That was not the only victory for the carbon-based (as opposed to silicone) crypto users last week. A Texas appeals court ruled that the US Treasury’s Office of Foreign Assets Control (OFAC) was wrong in their 2022 decision to sanction Tornado Cash – a crypto-mixer. Even though the protocol had been used by hackers linked to North Korea, the court ruled that Tornado Cash’s smart contracts were not the “property of a foreign national or entity” and therefore they could not be included in the OFAC’s sanctions list. Given the inapplicability of existing laws to blockchain technology, the court suggested new legislation needs to be passed to provide a more appropriate legal framework. Although good news for the DeFi world, which heavily relies on smart contracts to function, it is important to recognize that the ruling stops at software, that is to say it does not necessarily extend to the developers who write the code – assuming, of course, that this is done by a human as opposed to an AI agent, something that may not be true much longer (which opens up another whole can of legal worms).

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Virtuals Protocol Tokens on Base Skyrocket as AI Agent Demand Grows: Decrypt
• Human player outwits Freysa AI agent in $47,000 crypto challenge: TheBlock
• Tornado Cash users score ‘incredible win’ for crypto privacy in US court: DLNews
• Brazilian lawmaker proposes $18 billion Bitcoin reserve initiative: Cryptoslate
• XRP Replaces Tether as 3rd-Largest Cryptocurrency While BTC Faces $384M Sell Wall: Coindesk
• Death of Meta’s stablecoin project was ‘100% a political kill’ — Ex Diem boss: Cointelegraph

Trakx News

• Our next CGP seminar will be held on December 3rd in Aix-en-Provence, France. For more details, please contact [email protected].
• Ryan Shea published the November crypto monthly update Crypto Thanksgiving looking at the crypto markets response to Trump’s victory in last month’s US presidential election.

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

Trakx is a global fintech company creating new standards for digital asset investments. Through our trading platform, we offer thematic Crypto Tradable Indices (CTIs) and customised solutions, providing sophisticated investors with a high degree of compliance, custody and liquidity.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.